Final answer:
An illusory promise is a statement that looks like a promise but does not actually impose an obligation. These types of promises give the impression of being enforceable when they actually lack the binding elements of a contract, such as in some money-back guarantees.
Step-by-step explanation:
An illusory promise is a statement that appears to be a promise but does not actually bind the party to any obligation or performance. This type of promise gives the appearance of being enforceable, but upon closer examination lacks the necessary elements to be considered a valid contract. Such promises are not real because the party who makes them retains the choice to perform or not. They are called illusory because they do not guarantee that anything will actually be done. In contract law, for a promise to be considered valid, there must be a clear commitment to undertake an action or refrain from an action (known as consideration), which an illusory promise fails to provide.
For example, a money-back guarantee can sometimes be considered an illusory promise. If the guarantee allows for a full refund only under tightly controlled circumstances that are unlikely to occur, then it's not genuinely offering a guarantee of quality. It is giving the illusion of a guarantee without the seller actually having to uphold it under most circumstances. Such practices can occur in various markets, where the offer of a money-back guarantee or warranties often serves as a way to encourage purchases by offering apparent reassurances to the buyer.